Real Estate Q&A.

Modest Bump

Unrealistically High Asking Price May Slow Sale Of A Home

June 04, 1995|By Robert J. Bruss.

Q-How much higher should we set the asking price for our home than the amount we will accept? We followed your suggestion to interview three agents and have their CMA (competitive market analysis) reports so we are pretty certain of our home's value.

Our realty agent suggests an asking price $5,000 above what we will take. But our friends tell us to set the asking price 10 percent above our target sales price.

We're in no hurry to sell, as our new home won't be finished until at least August. What do you advise?

A-If you grossly overprice your home, many agents and their prospective buyers won't waste time looking at it. Of course, if you underprice your home, you lose out on valuable profits.

Congratulations on interviewing at least three successful local agents and getting their written CMA reports. Now you can feel confident of knowing the probable market value of your home.

If you were in a hurry to sell your home, I would suggest setting the asking price exactly at the market value indicated by the CMAs. However, because you're not in a rush to sell, setting the asking price no more than 5 percent above the target price you will accept leaves room for negotiation.

Q-Our Realtor advises us to list our home for sale "as is" because it needs about $5,000 of fix-up, such as new carpets and painting which we cannot afford. But I read that an "as is" sale warns "buyer beware." Our home is in good condition except for the paint job and new carpets. Should we offer our home for sale "as is"?

A-No. As a buyer of rental houses, I love "as is" houses because then I know the seller will often take a rock-bottom price. But an "as is" house is a warning to prospective buyers to be especially wary of serious defects.

Because your house has no undisclosed structural defects, just the need for cosmetic paint and carpets, I would advise against letting your Realtor advertise the house "as is."

As you probably know, "as is" means the seller and agent make no warranties or representations and the seller won't pay for any repairs.

Of course, you must disclose all known defects, but there is no sense calling attention to your home's shortcomings. Be prepared, though, for buyers who expect a discount for the home's need for paint and carpets.

Q-I've been enjoying your articles for many years. But I remember you used to emphasize home ownership is a great inflation hedge. However, in the last year or so I haven't seen such comments. Do you think homes are still a good inflation hedge?

A-Yes. Over the long term, home ownership is an excellent inflation hedge. The market value of homes usually rises faster than the inflation rate. But there is great variation by locality.

The problem is, local economic conditions, such as unemployment, can harshly influence this trend. For example, in Southern California many homes have lost value due to abnormal local economic and social conditions. Yet, other cities, such as Denver and Las Vegas, are having excellent home value appreciation rates.

Overall, the National Association of Realtors says nationwide average home values appreciated about 4 percent in 1994.

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The new Robert Bruss special report "How to Successfully Negotiate Your Home Sale or Purchase" is available for $4 from Tribune Media Services, 435 N. Michigan Ave., Room 1408, Chicago, IL 60611.

Please note: Real estate laws differ from place to place, and laws of your area should be checked before making decisions on real estate problems. Letters should be addressed to Tribune Real Estate Features Service, P.O. Box 280038, San Francisco, Calif. 94128.